Morgan Stanley analyst Michael Cyprys downgraded Coinbase (COIN) on Monday, cutting the price target by approximately 53% from $258 to $120. The bank cited recent trading trends, a softer revenue outlook, and uncertainty in the crypto market following Binance’s $6.3 billion hack as key drivers for the revision. While Morgan Stanley maintains that Coinbase remains one of the strongest competitors in the sector, it now expects profits to recover more slowly than previously forecast, which places additional pressure on the share price.
This downgrade follows Coinbase’s third-quarter earnings report released on Oct. 29, which showed a roughly 34% year-over-year decline in net revenue to $1.16 billion. The exchange reported $719 million in net income, largely driven by gains on cryptocurrency investments, while adjusted net income stood at $78 million. The earnings announcement triggered a broader selloff in crypto-linked stocks on Friday, with Coinbase shares falling more than 13% in midday trading amid the fallout from the Binance incident. Circle shares declined more than 9%, and Strategy fell about 8% during the same period.
Coinbase shares continued to slide on Monday, dropping more than 3.3% to trade at $138 at the time of writing, according to Yahoo Finance data. The stock's performance reflects ongoing market anxiety regarding regulatory and security risks within the cryptocurrency ecosystem.
The sharp reduction in Morgan Stanley’s price target signals a significant shift in institutional sentiment toward Coinbase, moving from optimism about recovery to caution regarding prolonged profitability challenges. By linking the downgrade directly to the Binance hack and softer revenue outlooks, the analysis underscores how external security failures can rapidly erode confidence in major exchanges, even those considered market leaders. This suggests that investors are increasingly pricing in systemic risk rather than just company-specific operational metrics.
For the broader crypto market, this development highlights the fragility of valuations when dependent on volatile trading volumes and uncertain regulatory environments. The expectation of slower profit recovery implies that Coinbase may face sustained margin pressures, potentially affecting its ability to compete on fees or invest in new services. Stakeholders should monitor whether other financial institutions follow suit with similar revisions, as a consensus downgrade could further depress sector-wide liquidity and investor participation.
